Global Market Report: Bananas

1 Bananas are the most important traded fruits in the world in terms of export value. Bananas are among the most traded fruits in the world. In 2017 alone, million tonnes of Bananas , excluding plantains, were traded, representing almost 20% of Global production that year. The value of this trade was worth USD 11 billion, which is higher than the export value of any other exported 3,9 While Asia is the largest banana-producing region, Latin America and the Caribbean is the largest exporting region, responsible for approximately 80% of Global The retail value of the sector was estimated to be worth between USD 20 billion and 25 billion in 2016, providing livelihoods to millions of smallholder farmers and plantation workers around the ,6 In Africa alone, Bananas are a source of income and jobs for more than 70 million Looking at production and trade figures at a country level, the largest producing and exporting countries in 2017 were spread out across geographic regions, with Ecuador at USD 3 billion, Costa Rica at USD billion, and the Philippines at USD 1 Meanwhile, the largest importing countries that year were the United States (USD billion), Belgium (USD billion), and Russia (USD billion).

2 3 Despite these high figures, it is worth noting that the banana trade balance (export import) overall has fluctuated significantly during the 2015 2018 period, registering oversupply in some years and shortages in others, normally in the range of 1 million to 2 million tonnes in either ,8,9 This fluctuation is due largely to the seasonality in banana demand and climate-related production challenges, such as severe floods, cooler temperatures, and mudslides. These Global Market report : BananasSUSTAINABLE COMMODITIES MARKETPLACE SERIES 2019 Vivek Voora, Cristina Larrea, and Steffany Bermudez Series Editor: Sofia Bali oVSS-compliant Bananas accounted for at least 7% of total banana production in 1. Bananas that comply with voluntary sustainability standards (VSSs) accounted for at least 7% of total banana production in 201634 Note: VSS-compliant production volumes refer to Bananas produced in compliance with one or more VSSs. Conventional production volumes do not comply with any existing VSSs.

3 production volumes that are defined as potentially VSS-compliant cannot be definitively listed in either category with the data currently available. VSS CompliantPotentiallyVSS CompliantConventionalMetric Tonnes93,000,00098,000,000103,000,000108 ,000,000113,000,000118,000,0002008200920 10201120122013201420152016 May 2020weather-related events and trends have affected some of the largest exporting countries in Latin America and the Caribbean, such as Colombia, Costa Rica, Guatemala, and 12 Aside from these developments, the spread of the recently emerged tropical Race 4 strain of the fungal disease Fusarium wilt in banana plantations is also threatening production volumes in the main growing regions and remains a situation to monitor ,14 Despite these production challenges, the Food and Agriculture Organization of the United Nations estimates that banana exports will overtake imports in 2019 due to the expansion of production capacities in certain countries, including Ecuador, Panama, and the are largely consumed domestically in producing countries.

4 Where they provide a substantial source of nutrition and food security for more than 400 million They are the staple food for millions of people and are considered the world s preferred fruit, given that they provide an affordable source of energy, vitamins, and 17 They are also a major export product; the Cavendish variety is the most commercialized type of banana, proving to be better suited to international trade than other varieties since it is more resistant to physical shocks in transport. Indeed, the particular transport challenges involving Bananas are important to consider; their perishability means that Bananas must be packed in boxes for export, shipped in refrigerated containers, and artificially ripened with ethylene before being transported to retailers and These steps, while important for trading Bananas , contribute to greenhouse gas increased uptake of voluntary sustainability standards (VSSs) in the banana sector is another important development to watch, especially given the pace of this uptake in recent years.

5 In 2016, 7% of banana production was VSS-compliant a notable development given that these standards were almost nonexistent in the sector about a decade That same year, 1% of production was potentially VSS-compliant, while conventional banana production accounted for 92% of the at future projections, the Market advisory firm Mordor Intelligence predicts that the sector will experience a compound annual growth rate (CAGR) of in consumption from 2019 to 2024, reaching a Global consumption volume of 136 million tonnes by 2025, compared to million tonnes in , 20 This projected growth is primarily driven by increasing demand in producing countries, particularly in the Asia-Pacific region, which currently accounts for 61% of Global consumption, led by India, China, and the ,20 This growth in projected demand will be underpinned by population growth in developing countries, the availability of domestically grown Bananas , improvements in per capita incomes, and associated shifts in diets related to health benefits and ,20 The consumption of local Bananas in many African countries is also notable, such as in Uganda, Rwanda, and Cameroon.

6 In those countries, per capita consumption can reach over 200 kg per year, especially in rural areas where the tropical fruit can provide up to 25% of a person s daily caloric ,21 Bananas are also becoming increasingly popular in Europe and North America, with consumers increasingly looking for healthier options, such as Bananas and other tropical fruits, to replace products containing refined ,16 Despite the predicted increase in demand, the banana sector faces important supply challenges that need to be addressed to meet this estimated Market growth. How many tonnes of Bananas are certified by each standard?Figure 2. VSS-compliant banana production volumes in 201634** production data for Global certification was not available when writing the report . The scheme reported a total of 252,602 hectares of land harvested certified globally in 2016, which represented the largest VSS-certified banana area in Alliance 7,353,847 tonnes Organic 1,090,405 tonnes Fairtrade International 830,951 tonnesMoreover, some of these problems also affect farmer livelihoods, which is an essential consideration.

7 Producing Bananas has become a race to the bottom, and establishing a living wage for banana farmers and workers is both urgent and ,22 Farm gate prices, which is the price paid to the farmer at the farm and does not consider transport cost to the point of export, have remained mostly unchanged over the past decades, while the prices for raw material inputs have fluctuated, putting significant pressure on farmer ,27 According to the United Kingdom-based non-profit Banana Link, [on] average, workers only earn between 5 and 9 per cent of the total value of Bananas , while retailers manage to capture between 36 and 43 per cent. 23 An additional USD per kg banana box, which retails for a loss at USD 14 per box, could provide producers and workers with better wages to alleviate poverty while having little impact on ,24 26 The wage situation reflects the sector s control by a few large multinational companies and retailers, which strive to provide customers with lower ,6,27 These companies, which include Del Monte, Fyffe s, Dole, and Chiquita, control entire supply chains and have little need for advertising, making price the main competitive factor for capturing Market Another factor affecting Market prices is the move in recent years by large supermarket chains in the United States and Europe to purchase Bananas directly from small wholesalers or growers.

8 This trend also reflects the fierce competition between retailers, particularly in European countries such as Germany and the United Kingdom, who are cutting banana prices to attract customers, even though the low prices affect farmers, workers, and, eventually, the entire economy of producing Some countries are taking policy action to address low farm gate prices and provide greater certainty to farmers. For example, the Government of Ecuador, the leading banana exporting country, annually establishes minimum reference farm gate and Free On Board (FOB) prices for a box of Bananas , which accounted in 2018 for USD per 43-pound box and USD per box, FOB price is the price paid for a box of Bananas at the point of export before it is shipped to importing countries. This price covers the price paid to the farmer plus export costs. While the intervention of the government aims to guarantee a decent price for farmers, some exporters argue that, by setting these reference prices, Ecuador loses competitiveness against other countries with lower prices, thus influencing the total volume of Bananas Clearly, efforts are needed from the industry as a whole, especially in main producing countries, for consistent intervention to raise the bar of the price paid to the farmer across the banana sector is also facing a race against time, as resistant varieties are being sought to combat Fusarium wilt, which wiped out the Gros Michel variety in the 1960s and is now threatening the Cavendish with its new tropical Race 4 strain.

9 As noted previously, the latter is the main variety of banana cultivated and exported worldwide, accounting for around 47% of Global ,16,19,30 A genetically modified Cavendish resistant to the tropical Race 4 strain has recently been discovered, though questions remain over the cost of implementation and concerns in many quarters over the long-term effects of genetically modified ,19,30 Besides this ominous prospect, the sector still faces other challenges to sustainable production , such as the impacts of climate change on crop yields; excessive pesticide use, which can pollute freshwater sources used in banana cultivation; and labour rights ,31,32 Indeed, climate change is expected to lead to declining LIVELIHOODS400 million people consume Bananas as a source of nutrition and food million people generate revenue from Bananas in VALUEOver USD billion in VSS-compliant Bananas based on 2016 banana producer 2008 2016 Conventional production is up by while VSS production is up by production IN LHDCs12% of total Bananas produced2% of VSS-compliant Bananas produced based on 2016 datayields in the largest banana-producing countries, such as India, Brazil, Colombia, Costa Rica, Guatemala, Panama, and the Philippines, which could lead to a demand-supply imbalance in the years to can lower the societal costs associated with banana banana exports can be traced as far back as 1996, when small quantities of Organic Bananas were shipped to the United States and Fairtrade Bananas were exported to the Netherlands, Denmark, and Belgium the next VSS-compliant banana production .

10 Which at first primarily came from smallholders, expanded significantly at the turn of the century, as large plantations owned by Dole, Fyffe, and Chiquita became Today, VSSs continue to play an important role in helping to address the sector s sustainability challenges, since the criteria embedded in each standard, which certified plantations and producers need to comply with, encourage the improvement of agricultural practices. These criteria include soil conservation measures that can enhance crop yields and the resilience of banana plantations to climate change, the definition of minimum and living wages for workers, and the application of integrated pest management measures. The external costs of conventional banana production , such as insufficient wages for small producers and workers and social security for workers, land occupation, greenhouse gas emissions, and water scarcity, are typically borne by society. These costs were estimated in 2017 to be USD per box. By comparison, the external cost of Fairtrade-produced Bananas was estimated to be USD per box a significant difference that demonstrates the reduced adverse impacts from VSS-compliant production .